You believe that the past years are a good indicator of the future performance of the assets and the assets risks can be assessed on a standalone basis using standard deviation and coefficient of variation and as a part of Office Pro's existing portfolio of assets using the Capital Asset Pricing Model (CAPM).
Your Manager, has asked you to prepare a report which will assist in making a decision for Office Pro. The following are some of the highlights of your report, assuming the market has a risk-free rate of 8 percent and the return on the market is 15 percent:
1. The Rate of Return for each Asset per year for 2007 to 2016.
2. Each asset's average rate of return based on the historical annual data provided.
3. Asset S and Asset T's standard deviation and coefficient of variation.
4. Comment on the risk and return for each asset based on your answers to 2 and 3 above.
5. The required return for each asset.
6. A recommendation on investing in which the two assets, giving reasons for your recommendation.
7. Comment on the use of standard deviation as oppose to the use of CAPM as a risk measurement.